Learning by Proxy | Catch 2020
All the posts published this year
When the lockdown started this year towards the end of March, I started writing Learning by Proxy. I had had a conversation in March about how it would be useful for many to know the things going on because it helps build context for them.
I found the time and was able to inculcate the discipline.
I wrote 39 Editions of Learning by Proxy this year. In addition to that, I have written 61 blogs this year, bringing the grand total to 100 blogs written in 2020. I just hope I am able to write just as many the next year as well!
Starting from the first week of April, every Saturday (Friday night) I have published this blog. Below are links to all of the 39 editions that I have written this year, with brief excerpts. I experimented with the format and layout throughout the year so you may find that the first 15 editions have a format that is no longer adhered to in later editions.
In May, I had two people on the mailing list - I was one of them. There are 115 people who receive this blog by mail today. For those of you who may have missed out on some of the older editions, this might be an opportunity to go through them over the holidays.
The fundamentals of business had started changing once the lockdown began. It caused many unexpected results. Edition 1
Health insurers are having a hard time - but car insurers? Nobody is driving around but they are all required to buy car insurance by law in most countries in the world. Car insurance companies are profiting a lot as claims drop off!
With the lockdown in force, doctor consults were hard to undertake and went online. Edition 2
In the current circumstances, they have cut the leash and issued a circular stating that they will allow companies to provide telemedicine. This has left existing hospitals and large healthcare institutions scrambling to add Zoom to their site so doctors can consult online. At the same time, it has opened up an opportunity for companies like Practo and Cure.fit to walk in and disrupt the space. I feel quite happy about this.
Subprime brought the world to the knees in 2008. It is still there, just the market exuberance has kept it from becoming a problem. Edition 3
So the number of subprime loans reduced to almost zero at the time and everything was alright. Only to blossom again starting in 2012. By 2014, it has already surpassed 120 Billion dollars worth of debt far more than the 97 Billion it was at in 2006 - the prior record.
Facebook poured a lot of money into Jio. Edition 4
Earlier this month as rumours swirled, I had written a post about why Reliance needs Facebook to invest in Jio - Badly. Facebook tried bringing its Facebook basics service to India and was chased out of India as fast as it arrived. It was against the principles of net neutrality. By making certain services free, they can make users prefer one over the other and kill the competitors. Reliance was dying under a mountain of debt and their plans to sell 20% of Reliance to the Saudis also fell through. They needed a lifeline. Facebook needed a partner who can twist the law to its will, has political clout and enough penetration.
By May, every country was in recession, except, of course, China. Edition 5
The economy contracted by 4.8% and estimates range from 20% to 40% contraction for the next quarter. This will be worse than the depression if it gets there.
The Indian government wanted to promote ‘Make in India’ and relaxed laws. Edition 6
India has put aside land twice the size of Luxembourg for the purpose of driving investment in production. The government obviously wants to use the hate that China is getting and bring as many manufacturing plants to India as possible. One of the main reasons China was able to move production to their country and bring so many businesses to its shore was because of its iron-fisted approach. The country was able to make land available and get factories chugging real quick.
India announced an economic stimulus. NOT. Edition 7
Last week the Indian government announced an Rs. 20 Lac Crore stimulus. It involves giving loans to some MSME businesses and also providing liquidity to banks. Rs. 17400 Crores given to farmers sounds like a lot. But when divided by 8.7 Crore of them, it translates to Rs. 2000 each. It is a mere drop in the ocean and unlikely to serve any purpose.
In May, China began playing with the border in earnest. Edition 8
Last week I had mentioned the Chinese incursion and island-building in the South China Sea. They are also building up their presence in Ladakh where the Indian forces have had a few skirmishes with them. Now they are building up a presence on the Pangong Tso Lake.
Twitter started flagging tweets by Donald Trump as false. Edition 9
Twitter has been a haven for trolls permitting harassment at an unprecedented level. It came as a huge surprise when Twitter which is in part responsible for Donald Trump being president decided to flag this tweet at false.
George Floyd’s death caused protests to rip through America. Edition 10
The death of George Floyd, juxtaposed on the Pandemic where a disproportionately larger number of black people have died was like putting salt on an open wound. To make matters worse, this was not a stray incident, Ahmed Aubrey a young boy was shot in a residential area by while men just a few weeks back. The anger coalesced and spilt onto the street. 72 cities in America protested and many of them burned. The president instead of soothing the pain, was searching for cayenne pepper.
The pandemic made the importance of the gig economy obvious! Edition 11
Over the past few years, the gig economy has taken a lot of brickbats. Gig workers are treated as contractors who can take up one sliver of work. Legislators across the globe have been after these entities to regulate them and force them to classify these gig workers as employees and provide them with full benefit. But what happens when employers throw them out due to poor economic conditions? Gig work might just have a silver lining! Call it part-time but it is a way out.
The decline in consumption of energy thanks to fewer offices being open resulted in Coal dying. Edition 12
Coal has been on its way down for a few years. In the US, gas-powered power plants have proved to be a much more viable source of energy than coal. This combined with the falling costs of renewable energy has made it harder for coal mines to continue to operate. Trump had said he will bring these coal jobs back. No one can stop the steady march of better economics, especially in a capitalistic system. This is not about the environment, it’s about profits.
Stock markets were almost back to their pre-COVID levels. Edition 13
Stock markets have evolved a great deal over the last century and while there is a retail (individual) participation, it represents a small proportion of the trading. As of 2016, 5.5% represented the retail participation in forex markets. While the number may be higher in stock markets, it would not be exponentially so. As of June, 50% of the trades in Indonesia were retail traders. Robinhood in the US and Zerodha in India have also seen exponential growth. This also explains why markets are behaving like they are high on coke, seemingly divorced from economic reality. Markets are essentially replacing casinos! It does not end well.
India started the China offensive by banning TikTok. Edition 14
There has been a call to boycott Chinese businesses and Chinese products for the past couple of weeks since the border clashes took place. At the same time, a lot of ink has been spilt trying to argue how impossible it would be to disengage economically from China. Further, it would be Indian manufacturers and Indian consumers who would be hurt by such moves. In the meantime, the Indian government has been putting its greatest weapon to work - Its bureaucracy. Chinese shipments have been delayed at the port of entry for “checking”. The Chinese have been returning the favour. This has caused a lot of trouble to both exporters as well as manufacturers in India. The next step seems to be apps that generate little to no revenue from India.
Trump banned student Visas and we got to know how important they were to the US economy. Edition 15
The USA has been busy disallowing Visa to several categories of people. Last week it hit students with a visa ban. Since the students would be required to attend classes online, why should they have to stay in the US? The universities sued the government from Boston to San Diego. The visa was the only thing that was going to get the students to pay tuition. Without it, the Universities would suffer revenue erosion!
Softbank had a tough year and they wanted to get rid of ARM to recapitalise. Edition 16
In the 1980s a British company called Acorn along with VLSI and Apple created a chip design company called ARM. ARM stood for Advanced RISC Machines. RISC stands for Reduced Instruction Set Computer. This was conceived as a way of enabling low powered devices. Intel, by comparison, was offering CISC - Complex Instruction Set Computers which are more power-hungry. When Steve Jobs came back to Apple in 1997, he sold ARM and used the money to save the company. When he went back to Intel in 2005 asking them to build a low power chip for mobile devices they refused. Apple moved to the ARM design and the rest, as they say, is history. Intel missed the train and today every phone and tablet runs on ARM. Windows already has ARM PCs and Apple announced last month that they are going to move the Mac to ARM.
Twitter got hacked. In a first - hackers got access to Obama’s account. Edition 17
Twitter got hacked last week. The hacker(s) used social engineering to gain access to an internal tool that allowed the hackers to reset password to verified accounts. Amongst others, they hacked the accounts of Bill Gates, Elon Musk, Barack Obama, Apple and others. The hackers asked the followers to transfer bitcoins to a wallet and said they would double the sum. The world we live in - some thought this was for real - and made the transfer!
China has been roiled in far too many issues - Border dispute, new-colonialism and source of the pandemic. Edition 18
Japan was considered a manufacturer of cheap transistors in the 1960s. Their products were considered low quality. Fast forward to 1980s, getting a Sony was a mark of buying a high-quality product. China went through a similar cycle. Even a decade back Chinese products were considered cheap and low quality. The last decade has caused a huge pivot in perception. Along with that pivot, a lot of product manufacturing moved to China.
As the tech sector got stronger and stronger through the Pandemic, the question of anti-trust popped up. Edition 19
Two years ago, Scott Galloway wrote a book called ‘The Four’; which breaks down the extent to which Google, Facebook, Amazon and Apple had taken over our lives. If you are not into reading, watch this video - 90 slides in 15 mins - from the DLD Conference.
The four companies together are today worth about 4.25 Trillion or about 1.5 times the GDP of India. Being in that position of power is bound to result in some abuse. Acquisitions are their favourite weapon and Shares are their preferred ammunition; issue as many as it takes to absorb the nearest innovator.
The competing laws around the world are breaking the internet. It needs a global law. Edition 20
After the Second World War, the American government was worried that an attack on the communications infrastructure might render their soldiers on the battlefield unable to communicate. DARPA wanted a decentralised communication network and the mandate was given to a bunch of researchers. They created the internet by connecting three universities by cable.
Since its origins, the internet has been free and open. Everything was accessible to everyone so long as there was a cable that went there. Then China joined the internet bandwagon. They created a Chinese version of the internet which is highly censored. And companies that were willing to bow to the government for having unhindered access to the Chinese market - almost all Chinese - made it big there.
The lockdown, economic hardships, the inequality, all contributed to a lot of anger across the world. Edition 21
When a lot of energy is suddenly released in the Earth’s atmosphere, the release of energy causes a shockwave that pushes the air molecules. The shockwave accelerates past sonic speed. As this happens it causes all the water vapour around it to condense, which we see as the mushroom-shaped cloud. It is true not just for nuclear explosions; but for all explosions of high magnitude.
Taking stock of various industries in the times of COVID. Edition 22
There has been much said about the hit that several industries have taken in the aftermath of COVID. The numbers are not offering proof and an insight into what has gone on. Businesses that need people to come out; entertainment, travel and hospitality, which apart from being real world are also discretionary expenses, which is a double whammy.
There is a battle raging to bring chip manufacturing back to the United States. Edition 23
In 1960 William Shockley took the design of the transistor invented at the Bell Labs and left to Stanford with a business plan. Stanford at the time was giving away land next to the apple orchard to invite tech companies. Two of his proteges Robert Noyce and Michael Moore worked toward miniaturising the transistor.
After the success of the Reliance Jio fundraises, the company decided to do an encore with Reliance Retail. Edition 24
When the economy is not performing well, the governments tend to reduce interest rates to encourage borrowing. The hope is that the borrowings will be invested to grow the business thereby creating jobs and increasing consumption.
On the other side, capital hates this low-interest environment. Hence, Capital began moving to the stock market seeking higher returns, causing the “Stupid Boom” that we are currently witnessing! Capital looks to buy assets that will appreciate over time. Listed or un-listed, businesses represent an asset.
Electric Cars have been offered as a panacea to the climate change problem. In the current form, they are anything but. Edition 25
In the summer of 2003, two entrepreneurs, who had invented the e-book business back in 1997, sold it and decided to pursue a new venture. They decided to take a Lotus chassis and add batteries to it and create an electric car. The genius that they accomplished was to design a motor that world run like an AC motor with DC input. DC is binary, full power or no power and this allows for limited acceleration. AC, by comparison, is a sinusoidal wave that allows a range of output.
A year later they were looking to raise a Series A and struggling to put the USD 7.5 Million together. A young dot com Millionaire showed up with a USD 6.5 Million cheque. His name was Elon Musk and the company we are talking about is Tesla. Over the subsequent years, the co-founders were ejected from the company for not being able to drive sales and Elon Musk took over as the CEO.
England has always been known to try to go a different route and hurt themselves. Brexit should not be a surprise. Edition 26
In 1527, Henry VIII wanted to annul his marriage. At the time he was needed to request the Pope in Rome for the annulment. The political differences between Rome and England resulted in a parliamentary declaration in 1532 naming Henry the Supreme Head on earth of the Church of England. This started the process of English Reformation and the move of the state away from Roman Catholicism.
The Irish, devout Catholics pushed back; and were put down with a heavy hand. So typically English! This also caused the first of the mass migration of Catholics from England which led to the population of land across the Atlantic Ocean which we know today as the United States of America.
The federal system distributes power between the centre and the state. That system is under attack. Edition 27
When the first settlers arrived in the US, proprietors were granted a charter by the King to lands in America. More and more people came and settled these lands and cities developed. For instance, Pennsylvania belonged to the Penn Family; the new "Maryland Colony" was named in honour of Henrietta Maria of France, wife of Charles I of England and belonged to George Calvert.
This is also the reason why you have plenty of small state in the American north-east. The rest of America was divided up by companies such as the Mississippi company and the Ohio company. These companies were created for land speculation, in which several investors from Europe invested. Many ended like Softbank did with WeWork, the Mississippi Company is often compared with the Tulip Mania. Real Estate is a tough cookie, I tell you.
Judiciary is the third branch of democracy. Is it really independent? Edition 28
Democracies are structured to have three branches - The executive, the legislature and the judiciary.
The legislature is appointed by the people through their vote. The legislature is responsible for creating and repealing laws, through a process of discussion and representation of interests. The legislature has two forms, Unicameral and Bicameral. I don’t want to turn this into a civics lesson and hence don’t want to go into the details but check out the links.
Russia is a managed dictatorship which tries to stay out of the news. This year they have struggled. Edition 29
Russia is more than twice the size of the USA and has a little less than half the population of the USA. Makes it a little more convenient to run a dictatorship. The land is so vast and so sparsely populated that most people probably don’t even know what is going on in Moscow.
Russia is what can be called a managed dictatorship. A country that has a veneer of democracy but in reality is bring run by an authoritarian regime. Vladimir Putin has been ruling the country since 1999. He was briefly the Prime Minister from 2008 to 2012, only to return to the position of President in 2012. He just got that term extended till 2036!
Television is superceding Cinema, as it is being reinvented! Edition 30
Philo Farnsworth invented the television. He even filed for a patent and got the patent as the sole inventor of the television. The patent was awarded to him in 1935. David Sarnoff, at the time, was running the Radio Corporation of America (RCA). RCA was the largest radio company in the world and by extension had a considerable share of the advertising dollars coming their way. Sarnoff also realised that the advent of the television would probably dent, if not completely destroy his business.
Governments have been keeping banks protected across the world, but they know they are standing on soft earth. Edition 31
The first Venture Capitalists financed wars. Throughout Europe and then in India and the US there has been a class of people and kings who have financed wars. If the war was won, they would be able to extract high interests or preferential agreements from those they financed and further their interests.
The French would always be known for losing out big time in this game of venture capitalism. They financed the American War of Independence, and by the time they could see the fruits of financing America, the French Revolution started, and all of those who gave the money ended up under the guillotine.
Across the world in the name of sensitivity, free speech is under attack! Edition 32
The libel was codified as illegal as far back at 130 AD in the Praetorian Edict in Rome. They said talk about the character of a person but not with an intention to cause injury or insult. Almost every country in the world has some version of the libel laws. Depending on how open or closed a country is, the law is utilised in different ways.
Also, the law only sees intention, not the outcome. This is part of the reason a person can plead insanity and be absolved of even a murder. It was not what was intended! How do you determine if the intent is to injure or insult?
The United States of America are not united at all. The Post-elections issue. Edition 33
Imagine you have a friend who is close to you. So close you depend on that friend for financial advice. Whose suggestions you take to make critical decisions. Now, say you discover this friend has bipolar disorder. Would you depend on that friend just as much?
Pretty much what the whole world thinks about America.
China has imperialistic ambitions and its conduit for enabling called OBOR. Seems to be backfiring. Edition 34
Vasco da Gama arrived in India on 20 May 1498. When he landed in Calicut, he requested the locals to take him to the Zamorin of Calicut so that he could negotiate trade. He took along with him some of the products that he had brought with him from Portugal. The Zamorin told him that the products, as well as the crafts that his people could produce, were far superior to what he brought from Portugal. The Zamorin refused to offer a trade agreement because Vasco da Gama had nothing worth trading. All he was able to extract was permission to buy spices from Calicut.
If at all there is one positive to come out of COVID, it is the benefits to the climate that is worth remembering. Edition 35
2020 started with a lockdown in China because of the widespread infection. China shuts down towards the end of January every year to celebrate the Chinese new year which usually occurs towards the first week of February. They extended their factory shut-down beyond the new year to ensure that people do not return to work and the virus can be controlled. And thus began the process of reducing global pollution this year.
India cobbled through the farm bill in the summer. It has come back to bite the government. Edition 36
When the European first came to India, they lusted after the Indian spices which were of very high quality. Also, they could not grow them locally in Europe and trading with India became a necessary evil. Indian farmers and kingdoms were able to quote the price they wished because the demand was high and farm output was not as much.
Over time, as the British chased all the rest of the Europeans out and consolidated power, they started forcing farmers to produce crops that they needed. Apart from food grains, poppy, tea and cotton were important for the British trade. What was the point of consolidating power if the Indians could charge what they wished?
Large acquisitions have been made this year only for the data that the companies possess. Edition 37
Clive Humbry said ‘Data is the new Oil’ in 2006. At the time Internet was still not as pervasive in our lives. Google was just 8 years old, Facebook was 2; nobody could have through that these two companies will ruin the world through the power of their data, but here we are. Two acquisitions were announced over the past week which proved the value of data.
As the year comes to an end, fittingly, the vaccine was delivered! Edition 38
The first mention of the practice of inoculation comes from an ancient Indian text called the ‘Sancteya Grantham’ written by Dhanwantari believed to have lived in 3000 B.C. At the time, it was used to cure CowPox. The practice resurfaced in China in the 10th Century as a cure for smallpox. The Europeans did not begin discovering inoculation till the end of the 17th century. It was an African slave that taught the Americans how to inoculate against smallpox in the 18th century.
While data has been valued, it has also been leaked and hacked throughout the year. Edition 39
When computers were introduced in 1960 to the colleges, the students were given the lowest priority. They needed to make the most of the little time that they were provided on the systems. This implied that they were required to invent shortcuts that would get something done with as little run time as possible. These shortcuts were called Hacks. By extension, hackers were far more well versed with code than the actual programmers. They know nuances far better to be able to extract the most out of code.
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What we think, we become ~ Buddha
You did some very good work this year. Look forward to reading your blogs in 2021 too